Method of executing conventional purchase transactions using cryptocurrency

ABSTRACT

A method of using cryptocurrency to transact fiat currency purchases using conventional POS apparatus includes funding by a user of a cryptocurrency account that requires withdrawal transactions to be signed by both the user and a payment platform. Upon purchase initiation, a platform-issued authorization number is entered into a merchant&#39;s POS apparatus and transmitted to the platform. Upon verification of sufficient cryptocurrency, the platform transmits payment information to the user, and upon approval thereof by the user, the user transmits a user-signed cryptocurrency transaction to the platform, and the platform remits fiat currency to the merchant. As purchases continue during an aggregation period, each user-signed transaction is sufficient to fund the aggregated purchases. Upon termination of the aggregation period, the most recent user-signed transaction is executed to withdraw cryptocurrency from the user&#39;s account. The user can display the authorization number on a mobile device for scanning by the POS apparatus.

RELATED APPLICATIONS

This application claims the benefit of U.S. Provisional Application No.62/848,253, filed May 15, 2019, which is herein incorporated byreference in its entirety for all purposes.

FIELD OF THE INVENTION

The invention relates to cryptocurrencies, and more particularly, tomethods of completing purchases using cryptocurrencies.

BACKGROUND OF THE INVENTION

For many individuals, cryptocurrencies have become an increasinglyattractive alternative to conventional “fiat” currencies. Reasons vary,and include opportunities for currency speculation, financial anonymity,and a general mistrust of the fiscal policies of government entities,which some individuals perceive to be political entities that can beunduly influenced by expedient political motives rather than soundfiscal policy.

While cryptocurrencies can be readily purchased, held, and sold, insomewhat the same manner as stocks or bonds, individuals who holdcryptocurrency have few options for actually using it as a currency. Inmost cases, users hold funds in online “wallets” (which may be privateor custodial), and exchange them for fiat currencies when they wish touse the stored value to make a purchase. As such, cryptocurrencies aresimilar to stocks or bonds, in that they must be liquidated before theirvalue can be used.

There are some limited opportunities to use cryptocurrencies as actualcurrencies. For example, some retailers, mostly online retailers, willaccept payment in selected cryptocurrencies. However, these represent avery small fraction of online retailers, and almost no in-personretailers. There are also many payment services that acceptcryptocurrency for online payments. With most of these services,however, a normal blockchain (so called “on-chain”) transaction is sentfrom the user to the payment service. The payment service then has theluxury of waiting for validation of the blockchain transaction, whichcan take minutes or even hours, before payment is made. Validation ofthe blockchain transaction ensures that the transaction is indeedirreversible, and is not an attempt to spend the same cryptocurrencytwice (a “double-spend”).

Furthermore, each on-chain cryptocurrency transaction normally incurs anetwork fee called a “miner” fee. For example, Bitcoin miner fees can beas much as $50 per transaction. Reversals and mistakes also requireon-chain transactions and are therefore costly for the merchant and/orconsumer.

Many individuals who invest in cryptocurrencies desire to use theircryptocurrency in the same manner as conventional fiat currency, forexample when making retail purchases. However, in a retail point-of-sale(POS) setting the luxury of waiting for blockchain confirmations is notavailable. Both the consumer and the retailer expect and require that atransaction will be completed within roughly 30 seconds or less. Also,incurring a miner fee each time a retail transaction is completed couldsignificantly increase the costs of the purchases, and could thereforebe a strong disincentive to using cryptocurrency for retailtransactions.

Additionally, a cashier needs to be able to reverse transactions withoutpenalty, in the event the consumer has made a mistake, a product isreturned, etc. Furthermore, in-person POS purchases (as compared toonline purchases) typically require use of a merchant POS device, andsuch devices are configured for use either of fiat currency in cash, useof a physical debit or credit card, or scanning of a code displayed on amobile device that is linked to a debit or credit card, for example via“Apple Pay” or “Google Pay.” Such POS devices are not configured forprocessing of payments via cryptocurrencies.

What is needed, therefore, is a method for enabling cryptocurrencies tobe readily and conveniently used for conventional purchases, includingin-person point of sale purchases using conventional POS apparatus,without requiring blockchain transaction delays, without eachtransaction being subject to a separate blockchain transaction fee, andwithout incurring additional fees when a transaction is changed orreversed.

SUMMARY OF THE INVENTION

The present invention is a method for enabling cryptocurrencies to bereadily and conveniently used for conventional purchases, includingin-person point of sale purchases using conventional POS apparatus,without requiring blockchain transaction delays, without eachtransaction being subject to a separate blockchain transaction fee, andwithout necessarily incurring additional fees when a transaction ischanged or reversed.

According to the present method, cryptocurrency purchases are mediatedby a payment platform. A user opens an account with the payment platformthat is linked to a cryptocurrency payment application (“app”) runningon a wireless mobile device possessed by the user. In embodiments, thewireless mobile device is a smartphone. At least one cryptocurrency“wallet” is created and associated with his account, and funds each ofthe wallets with cryptocurrency. The wallets require that eachtransaction is doubly signed by both the user and the payment platform,such that the funds can only be distributed from a wallet via ablockchain transaction that is signed by the private keys of both theuser and the payment platform. This dual-signing approach providesassurance to the payment platform that no expenditure of the depositedcryptocurrency can take place without their participation, and hence noattempt can be made to “double-spend” the deposited cryptocurrency.

As a result of the double-signing requirement, the cryptocurrency thatfunds the wallets of the user's account is subject to the “jointcustody” of the user and the payment platform, according to the“two-of-two” multi-signature requirement for distribution. Inembodiments, the payment platform account is subject to a contractbetween the user and the payment platform specifying terms thatguarantee return to the user of sole control over the cryptocurrencythat is stored in the account in the case of any dispute between theparties, or failure to perform on the part of the payment platform.

When making a purchase, the user presents to a merchant a payment numberthat was issued to the user by the payment platform. In embodiments, thepayment number functions as a placebo debit card number, in that it canbe entered by a merchant into traditional POS equipment that isconfigured to accept debit card information, or processed by a websitethat is configured to accept debit card numbers as payment.

In embodiments, immediately or shortly before making the purchase, theuser transmits a request for an authorization code to the paymentplatform using the cryptocurrency payment app that is running on theuser's mobile device, and in response the payment platform transmits asingle-use payment number to the app which can be displayed on themobile device, for example as a barcode, “QR” code, or other visibleimage to be scanned. In some of these embodiments, the payment number isonly valid for a limited time period. If the merchant POS apparatus isnot equipped to scan the image, the merchant can manually enter thepayment number into the POS apparatus. Similarly, in embodiments theuser can enter the payment number into a website as part of an onlinepurchase.

In other embodiments, the payment number is a static digit string thatis recorded on a physical card that functions as a “placebo” debit card.As with an actual debit card, the static digital string can bephysically stamped on the card, magnetically recorded on the card,and/or electronically recorded in a “chip” included in the card. Whenentered into the POS apparatus, the static digital string is used forrouting the transaction from the POS apparatus to the payment platformfor authorization.

Once the payment number or placebo debit card has been presented to themerchant and entered into the POS apparatus, the POS apparatus transmitsa payment request, together with details describing the requestedtransaction to the payment platform via a conventional fiat currencypayment network. The transaction details include merchantidentification, the payment number, the item to be purchased, and thefiat currency amount to be paid to the merchant.

Having received the payment request, the payment platform proceeds todetermine whether the user's account contains sufficient cryptocurrencyto complete the transaction. If not, then the payment request from themerchant is declined. If so, then the payment platform wirelesslytransmits, to the user's mobile device, payment information thatincludes an amount of cryptocurrency that is needed to complete thetransaction, including any applicable user fees, and the applicableexchange rate for the cryptocurrency. The payment information ispresented to the user by the mobile device, and based on the paymentinformation the user either approves or disapproves the purchase. If thepurchase is disapproved by the user, then the payment platform declinesthe payment request from the merchant. If the purchase is approved bythe user, then the payment platform accepts the payment request from themerchant, and initiates a merchant settlement transaction, eitherdirectly with the merchant or via a payment network partner, wherebyfiat currency is transmitted to the merchant in the amount of thepurchase.

In similar embodiments, the user is able to preauthorize expenditure ofcryptocurrency, for example using a mobile app running on a handhelddevice or using a computer via the internet, either in a specific amountfor a specific purchase, or as a maximum amount, with the specificpurchase vendor and price to be determined later. The preauthorizationcan be for a limited period of time and/or limited to a specificmerchant and/or type of merchandise. At the time of purchase, the usercan present a payment number to a merchant, for example using ascannable QR code or a placebo debit card, which is processed asdescribed above, except that approval by the user at the point of saleis not required due to the preauthorization by the user. According tothis approach, use of the mobile device at the point of sale is notnecessarily required, for example if the payment number is presented tothe merchant in the form of a placebo debit card.

Accordingly, from the merchant's point of view, in embodiments thepurchase transaction is similar or identical to a conventional fiatcurrency transaction, in that the merchant processes the payment requestusing conventional POS apparatus and/or software, which transmits thepayment request including purchase information via a conventionalpayment network or via the internet to the payment platform, eitherdirectly or through a partner of the payment platform.

It is notable that, in embodiments, the payment number functions only asa routing number that is used to connect the merchant's POS apparatus tothe payment platform. As such, the payment number cannot be used tomisappropriate cryptocurrency funds, for example if a payment code usedfor an online transaction is stolen as part of a cyber intrusion of theonline vendor, because completion of any purchase requires transmittalof all relevant purchase information by the payment platform to theuser's mobile device and authorization of each purchase by the user.Accordingly, while the present invention enables a user to makecryptocurrency-funded purchases in the same manner as when usingfiat-currency, embodiments of the present invention nevertheless offerconsiderably higher security against fraud as compared, for example, toa conventional debit or credit card.

As the user's payment platform account is used to make purchases,instead of initiating a separate blockchain transaction corresponding toeach of the purchases, the payment platform aggregates a plurality ofpurchases, and then initiates a single blockchain transaction in anamount that is sufficient to fund all of the purchases, therebyminimizing the blockchain transaction fees that are incurred. In variousembodiments, the period of aggregation can be a fraction of a day, anentire day, a week, a month, or even longer. In embodiments,transactions made by a plurality of users are aggregated and convertedto fiat currency in a single blockchain conversion, thereby furtherreducing blockchain conversion fees.

According to this approach, each time the user makes a purchase, theuser submits a user-signed blockchain transaction to the paymentplatform authorizing withdrawal from the user's account of sufficientcryptocurrency to fund all of the user's transactions that have beenmade since the most recent, previous aggregate blockchain conversion. Asthe aggregation process continues, each time a new user-signedtransaction is received, the payment platform archives or discards anypreviously received, unused user-signed transactions in favor of the newone.

Once the aggregation process is completed, the most recent user-signedtransaction is signed by the payment platform and submitted to theblockchain for withdrawal of cryptocurrency from the user's account andconversion into fiat currency.

In some embodiments, the payment platform maintains a “buffer” fund offiat currency that enables the payment platform to extend theaggregation period while timely remitting transaction amounts tomerchants upon verification of purchase transactions, after which thepayment platform subsequently executes a blockchain conversion toreplenish the buffer fund.

In some embodiments, when a new cryptocurrency wallet is opened for auser, the payment platform issues an address to the user for the newwallet, but does not initially deploy a new smart contract. Instead, theactual deploying of the smart contract is delayed until after a firstpurchase has been made using the issued address, and after anysubsequent aggregation period has been completed.

In this way, the fees and any other expenses that are required to deploya new smart contract are not incurred until they are actually needed.And in the case that a user determines that a wallet will not be needed,without having ever used the wallet, then the cost of deploying a newsmart contract is avoided.

In various embodiments, if a user wishes to obtain a wallet for thepurpose of holding a first type of cryptocurrency, for which thecreation and/or maintenance of such a wallet requires an expenditure ofa second type of cryptocurrency for the payment of fees, the paymentplatform is able to create the wallet for the first type ofcryptocurrency without requiring that the user open and fund a walletdirected to the second type of cryptocurrency. For example, creation fora user of a wallet containing U.S. Dollar Coin (USDC) cryptocurrencywill typically require use of the Ethereum blockchain, for which thetransaction fees must be paid in Ether. However, embodiments of thepresent invention are able to use an Ethereum wallet maintained by thepayment platform to make Ether payments on behalf of the user. The feesfor creating the USDC wallets can then be assessed against the user inUSDC currency, or in any other denomination, including fiat currency.

In embodiments, the cryptocurrency amount that is included in eachuser-signed transaction is calculated according to the cryptocurrencyexchange rates that were applicable at the time each of the purchaseswas made. As such, the payment platform accepts any benefit or loss thatmay ensue due to fluctuations in the cryptocurrency exchange rate duringthe aggregation period. Accordingly, in some embodiments, the paymentplatform is able to time the eventual blockchain conversion, and delayit as necessary, so as to take advantage of any fluctuations in theexchange rate of the cryptocurrency.

Aggregation of cryptocurrency transactions further enables the paymentplatform to accept corrections and reversals of transactions if they aremade before the aggregated blockchain conversion is executed.Accordingly, in embodiments the payment platform guarantees that theblockchain conversion will be delayed by at least a specified interval,such as an hour, so as to allow correction of mistakes etc. withoutincurring blockchain fees. In some of these embodiments a reversal of atransaction does not require any additional authorization or interactionby the user, since the payment platform can simply revert to the mostrecent, previously submitted user-signed transaction. In otherembodiments, reversal of a transaction requires authorization by theuser, such that a new user-signed blockchain transaction is provided tothe payment platform specifying the corrected amount of cryptocurrencyto be withdrawn from the wallet and used for the next blockchainconversion.

Embodiments further establish reserve funds of cryptocurrency, which canbe liquidated to offset a shortfall when the exchange rate for thecryptocurrency falls between the time of purchase and the eventual timewhen the blockchain conversion occurs. In similar embodiments, thepayment platform can choose to sell cryptocurrency from the reserve fundin an amount that provides sufficient fiat currency to satisfypoint-of-sale (POS) transaction requirements, after which user'sauthorized withdrawals from the wallet can be executed and used forblockchain conversion of funds at a later time, when the exchange ratehas recovered and the user's authorized transaction amount will yieldsufficient fiat currency to replenish the buffer fund. In some of theseembodiments, usage fees that are charged to the user are paid by theuser in cryptocurrency, which is used to fund or supplement the reservecryptocurrency fund.

A first general aspect of the present invention is a method of usingcryptocurrency to complete a fiat currency purchase from a merchant. Themethod includes the following steps:

-   -   A) depositing by a user of cryptocurrency into a cryptocurrency        account from which withdrawal of the cryptocurrency requires        submission of a blockchain transaction that is signed by both        the user and by a payment platform;    -   B) issuing by the payment platform of a payment number to the        user, said payment number being compatible for input into fiat        currency point of sale (POS) payment processing systems;    -   C) upon initiation of the fiat currency purchase from a merchant        by the user, inputting of the payment number into a POS        apparatus of the merchant;    -   D) transmitting by the POS apparatus of a payment request to the        payment platform, said payment request including a fiat currency        purchase price;    -   E) if a cryptocurrency balance of the cryptocurrency account is        sufficient to fund the fiat currency purchase price at a current        cryptocurrency exchange rate, transmitting by the payment        platform of payment information to the user, said payment        information including an equivalent cryptocurrency purchase        amount;    -   F) transmitting by the user to the payment platform of a payment        approval and a user-signed transaction, said user-signed        transaction authorizing transfer to the payment platform from        the user's cryptocurrency account of cryptocurrency in an        aggregate amount equal to a sum of the equivalent cryptocurrency        purchase amount and any previous cryptocurrency purchase amounts        applicable to previous purchases made by the user since a most        recent blockchain conversion was executed by the payment        platform;    -   G) transmitting by the payment platform of fiat currency in an        amount equal to the fiat currency purchase price to the merchant        by the payment platform;    -   H) deducting of the equivalent cryptocurrency purchase amount        from the cryptocurrency balance of the cryptocurrency account;        and    -   I) during a purchase aggregation period, repeating steps C)        through H) each time a fiat currency purchase is initiated by        the user; and    -   J) upon expiration of the purchase aggregation period, executing        by the payment platform of a most recent of the user-signed        transactions received from the user, thereby initiating a        blockchain conversion.

In embodiments, step B) includes sending by the user of a request forthe payment number to the payment platform via a mobile device that ispossessed by the user, and transmission of the payment number by thepayment platform to the mobile device. In some of these embodiments thepayment number is valid only for transaction of a single purchase.

In any of the above embodiments, the payment number can be valid onlyfor a designated time period after it is issued.

In any of the above embodiments, step B) can include issuing by thepayment platform to the user of a physical placebo card having thepayment number recorded as a static string thereupon.

In any of the above embodiments, in step E) the payment information caninclude the current cryptocurrency exchange rate

In any of the above embodiments, step A) can include depositing by theuser of a plurality of types of cryptocurrency into a correspondingplurality of cryptocurrency accounts, and wherein the payment numberissued to the user by the payment platform in step B) is directed to aselected one or more of the cryptocurrency accounts. In some of theseembodiments, in step E), if the cryptocurrency balance of thecryptocurrency account to which the payment number is directed is notsufficient to fund the fiat currency purchase price, the paymentinformation transmitted by the payment platform to the user includesproposed amounts of cryptocurrency to be withdrawn from a plurality ofthe cryptocurrency accounts to fund the fiat currency purchase price.

In any of the above embodiments, the method can further include, afterstep I) and before a first execution of step J), deploying a new smartcontract associated with the cryptocurrency account.

A second general aspect of the present invention is a method of usingcryptocurrency to complete a fiat currency purchase from a merchant. Themethod includes the following steps:

-   -   A) depositing by a user of cryptocurrency into a cryptocurrency        account from which withdrawal the cryptocurrency requires        submission of a blockchain transaction that is signed by both        the user and by a payment platform;    -   B) issuing by the payment platform of a payment number to the        user, said payment number being compatible for input into fiat        currency point of sale (POS) payment processing systems;    -   C) transmitting by the user to the payment platform of a        preauthorization request including a user-signed transaction,        said user- signed transaction authorizing transfer to the        payment platform from the user's cryptocurrency account of        cryptocurrency in an aggregate amount equal to a sum of a        cryptocurrency preauthorization amount and any previous        cryptocurrency purchase amounts applicable to previous purchases        made by the user since a most recent blockchain conversion was        executed by the payment platform;    -   D) if a cryptocurrency balance of the cryptocurrency account is        greater than the cryptocurrency preauthorization amount,        subtracting by the payment platform of the cryptocurrency        preauthorization amount from the cryptocurrency balance and        transmitting by the payment platform to the user of a        preauthorization approval;    -   E) upon initiation of the fiat currency purchase from a merchant        by the user, inputting of the payment number into a POS        apparatus of the merchant;    -   F) transmitting by the POS apparatus of a payment request to the        payment platform, said payment request including a fiat currency        purchase price;    -   G) determining by the payment platform of a cryptocurrency price        equivalent of the fiat currency purchase price according to a        current cryptocurrency exchange rate;    -   H) If the cryptocurrency price equivalent is less than or equal        to the preauthorization amount, transmitting by the payment        platform of fiat currency in an amount equal to the fiat        currency purchase price to the merchant;    -   I) if the cryptocurrency price equivalent is less than the        preauthorization amount, sending by the payment platform of a        request for a revised user-signed transaction authorizing        transfer to the payment platform from the user's cryptocurrency        account of cryptocurrency in an aggregate amount equal to a sum        of the cryptocurrency price equivalent and the previous        cryptocurrency purchase amounts applicable to previous purchases        made by the user since the most recent blockchain conversion was        executed by the payment platform;    -   J) upon receipt of the revised user-signed transaction, adding        to the cryptocurrency balance by the payment platform of an        amount equal to the difference between the preauthorization        amount and the cryptocurrency price equivalent;    -   K) during a purchase aggregation period, if and each time a fiat        currency purchase is initiated by the user, repeating steps C)        through J); and    -   L) upon expiration of the purchase aggregation period, executing        by the payment platform of a most recent of the user-signed        transactions received from the user, thereby initiating a        blockchain conversion.

In embodiments, step C) can include sending by the user of thepreauthorization request via a user mobile device.

In any of the above embodiments, step B) can include issuing by thepayment platform to the user of a physical placebo card having thepayment number recorded thereupon as a static string.

In any of the above embodiments, the preauthorization approval can bevalid only for transaction of a single purchase.

In any of the above embodiments, the preauthorization approval can bevalid only for a designated time period after it is issued.

In any of the above embodiments, step A) can include depositing by theuser of a plurality of types of cryptocurrency into a correspondingplurality of cryptocurrency accounts, and the payment number issued tothe user by the payment platform in step B) can be directed to aselected one or more of the cryptocurrency accounts.

In any of the above embodiments, the previous cryptocurrency purchaseamounts can be determined according to cryptocurrency conversion ratesthat were applicable when corresponding previous purchases weretransacted.

Any of the above embodiments can include, during the aggregation period,accepting a reversal of a fiat currency purchase made by the user sincethe most recent blockchain conversion.

In any of the above embodiments, the blockchain conversion can includeexecuting of a plurality of user-signed transactions received from aplurality of users.

In any of the above embodiments, the aggregation period can be a fixedperiod of time.

In any of the above embodiments, the aggregation period can beterminated when the aggregate amount exceeds a specified maximum.

In any of the above embodiments, the fiat currency transmitted by thepayment platform to the merchant can be withdrawn from a fiat currencybuffer account maintained by the payment platform, and the aggregationperiod can be terminated when a balance of the fiat currency bufferaccount falls below a specified minimum.

In any of the above embodiments, the aggregation period can beterminated by the payment platform according to a decision made by thepayment platform in view of fluctuations in the cryptocurrency exchangerate.

Any of the above embodiments can further include maintaining by thepayment platform of a cryptocurrency reserve fund; and if executing themost recent user-signed transaction does not yield sufficient fiatcurrency to replenish a total of the fiat currency payments made tomerchants since the most recent blockchain transaction, includingcryptocurrency from the reserve fund in the blockchain transaction.

Any of the above embodiments can further include collecting fees fromthe user, said fees being denominated in cryptocurrency and deposited inthe reserve account.

And in any of the above embodiments, the method can further include,after step K) and before a first execution of step L), deploying a newsmart contract associated with the cryptocurrency account.

The features and advantages described herein are not all-inclusive and,in particular, many additional features and advantages will be apparentto one of ordinary skill in the art in view of the drawings,specification, and claims. Moreover, it should be noted that thelanguage used in the specification has been principally selected forreadability and instructional purposes, and not to limit the scope ofthe inventive subject matter.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1A is a flow diagram that illustrates an embodiment of the presentinvention wherein a QR-code displayed on a wireless mobile deviceenables the use of cryptocurrency to make a purchase from a merchant ata point-of-sale;

FIG. 1B is a flow diagram that illustrates an embodiment of the presentinvention wherein a placebo debit card enables the use of cryptocurrencyto make a purchase from a merchant at a point-of-sale; and

FIG. 2 is a flow diagram that illustrates aggregation in an embodimentof a plurality of user transactions before executing a blockchainconversion to replenish a fiat currency buffer fund

DETAILED DESCRIPTION

The present invention is a method for enabling cryptocurrencies to bereadily and conveniently used for conventional purchases, includingin-person point of sale purchases using conventional POS apparatus,without encountering blockchain transaction delays, without eachtransaction being subject to a blockchain transaction fee, and withoutnecessarily incurring additional fees when a transaction is changed orreversed.

According to the present method, cryptocurrency purchases are mediatedby a payment platform. A user creates an account with the paymentplatform that is linked to a cryptocurrency payment application (“app”)running on a wireless mobile device possessed by the user. Inembodiments, the wireless mobile device is a smartphone. The user thencreates at least one cryptocurrency “wallet” associated with hisaccount, and funds each of the wallets with cryptocurrency. Each of thewallets is doubly signed by both the user and the payment platform, suchthat the funds can only be distributed from a wallet via a blockchaintransaction that is signed by the private keys of both the user and thepayment platform. This dual-signing approach provides assurance to thepayment platform that no expenditure of the deposited cryptocurrency cantake place without their participation, and hence no attempt can be madeto “double-spend” the deposited cryptocurrency.

As a result of the double-signing requirement, the cryptocurrency thatfunds the user's account is subject to the “joint custody” of the userand the payment platform, according to the “two-of-two” multi-signaturerequirement for distribution. In embodiments, the payment platformaccount is subject to a contract between the user and the paymentplatform specifying terms that guarantee return to the user of solecontrol over the cryptocurrency in the account in the case of anydispute between the parties, or failure to perform on the part of thepayment platform.

With reference to FIG. 1A, when making a purchase, the user presents toa merchant a payment number that was issued to the user by the paymentplatform. In embodiments, immediately or shortly before making thepurchase, the user transmits a request 100 for a payment number (PAnumber) to the payment platform using the cryptocurrency payment appthat is running on the user's mobile device, and in response the paymentplatform transmits 102 a single-use PA number to the app which can bedisplayed on the mobile device 104 as the payment number, for example asa barcode, “QR” code, or other visible image to be scanned. In some ofthese embodiments, the PA number is only valid for a limited timeperiod. The merchant proceeds to scan the visible image 106, or if themerchant POS apparatus is not equipped to scan the image, the merchantcan manually enter the payment number into the POS apparatus. Similarly,in embodiments the user can enter the payment number into a website aspart of an online purchase.

In other embodiments, the payment number is a static digital string thatis recorded on a physical card that functions as a “placebo” debit card.As with an actual debit card, the static digital string can bephysically stamped on the card, magnetically recorded on the card,and/or electronically recorded in a “chip” included in the card. Whenentered into the POS apparatus, the static digital string is used forrouting the transaction from the POS apparatus to the payment platformfor authorization.

Once the PA number has been presented to the merchant and entered intothe POS apparatus 106, the POS apparatus transmits a payment request,together with details describing the requested transaction, to thepayment platform via a conventional fiat currency payment network. Thetransaction details include merchant identification, the paymentauthorization code, the item to be purchased, and the fiat currencyamount to be paid to the merchant.

Having received the payment request, the payment platform proceeds todetermine whether the user's account contains sufficient cryptocurrencyto complete the transaction 108. If not, then the payment request fromthe merchant is declined. If so, then the payment platform wirelesslytransmits 110 to the user's mobile device payment information thatincludes an amount of cryptocurrency that is needed to complete thetransaction, including any applicable user fees, and the applicableexchange rate for the cryptocurrency. The payment information ispresented to the user by the mobile device 112, and based on the paymentinformation the user either approves or disapproves the purchase 114. Ifthe purchase is disapproved by the user, then the payment platformdeclines the payment request from the merchant. If the purchase isapproved by the user 116, then the payment platform accepts the paymentrequest from the merchant 118, the merchant completes the sale to theuser 120, and the user receives the purchased goods and/or services 121.Meanwhile, the payment platform initiates a merchant settlementtransaction 122, either directly with the merchant or via a paymentnetwork partner, whereby fiat currency is transmitted to the merchant inthe amount of the purchase 124.

With reference to FIG. 1B, in similar embodiments the user is able topre-authorize expenditure of cryptocurrency 130 by sending apreauthorization user-signed transaction to the payment platform in acryptocurrency preauthorization amount, for example using a computer viathe internet, either in a specific amount for a specific purchase, or asa maximum amount, with the specific purchase vendor and price to bedetermined later. The preauthorization can be for a limited period oftime and/or limited to a specific merchant and/or type of merchandise.

Upon receipt of the preauthorization request, the payment platformdetermines whether sufficient funds are available in the user's account132, and if so, then the requested amount is withdrawn from the user'saccount and set aside in anticipation of the preauthorized purchase.

At the time of purchase, instead of requiring that a QR-code or othertransitory indicia be scanned by the POS apparatus, the user can simplypresent the placebo debit card to the merchant 134, which is processedby the POS apparatus as if it were a conventional debit or credit card136 and used to route a purchase request including a fiat currencypurchase price to the payment platform.

Upon receipt of the purchase request, the payment platform determines138 if the preauthorized cryptocurrency amount is sufficient to fund thepurchase price according to a current cryptocurrency exchange rate. Ifso, then the purchase is completed as described above. If the amount ofcryptocurrency required to fund the purchase price is less than thepreauthorized cryptocurrency amount, then the payment platform sends arequest 140 to the user for a revised user-signed transaction thatreflects the actual expenditure of cryptocurrency rather than thepreauthorized amount.

At a later point in time, for example when the user has returned tohis/her computer, the user sends the revised user-signed transaction tothe payment platform 142, which then replaces the earlierpreauthorization user-signed transaction.

It is notable that in embodiments, according to this approach, use of amobile device at the point of sale is not required, because the purchaseamount has already been pre-authorized before the user arrives at thepoint of sale.

Accordingly, from the merchant's point of view, in embodiments thepurchase transaction is similar or identical to a conventional fiatcurrency transaction, in that the merchant processes the payment requestusing conventional POS apparatus and/or software, which transmits thepayment request including purchase information via a conventionalpayment network or via the internet to the payment platform, eitherdirectly or through a partner of the payment platform.

It is notable that the payment number, or the static string recorded onthe placebo debit card, functions only as a routing number that is usedto connect the merchant's POS apparatus to the payment platform. Assuch, the payment number cannot be used to misappropriate cryptocurrencyfunds, for example if a payment code used for an online transaction isstolen as part of a cyber intrusion of the online vendor, becausecompletion of any purchase requires transmittal of all relevant purchaseinformation by the payment platform to the user's mobile device andauthorization of each purchase by the user. Accordingly, while thepresent invention enables a user to make cryptocurrency-funded purchasesin the same manner as when using fiat-currency, the present inventionnevertheless offers considerably higher security against fraud ascompared, for example, to a conventional credit card.

As the user's payment platform account is used to make purchases,instead of initiating a separate blockchain transaction corresponding toeach of the purchases, the payment platform aggregates a plurality ofpurchases 126, and then initiates a single blockchain transaction in anamount that is sufficient to fund all of the purchases 128, therebyminimizing the blockchain transaction fees that are incurred. In variousembodiments, the period of aggregation can be a fraction of a day, anentire day, a week, a month, or even longer. In embodiments,transactions made by a plurality of users are aggregated and convertedto fiat currency in a single blockchain conversion, thereby furtherreducing blockchain conversion fees.

In various embodiments, the payment platform instead maintains a“buffer” fund of fiat currency that is used to timely remit transactionamounts to merchants 122 upon verification of purchase transactions 118,thereby allowing the payment platform to subsequently execute theblockchain conversion 128 and replenish the buffer fund at a later timethat is deemed more appropriate.

FIG. 2 illustrates an example of the interaction between the user andthe payment platform in an embodiment as the user makes multiple retailpurchases using cryptocurrency. According to the illustrated example,when the user accepts the purchase details and authorizes payment of themerchant 114 for a first purchase 200, in addition to the request for apayment authorization code 100 and other steps described above withreference to FIG. 1 , the user transmits to the payment platform auser-signed blockchain transaction 202 specifying a transfer ofcryptocurrency from the user's cryptocurrency account to the paymentplatform in an amount that would be sufficient to cover the purchaseprice “A” of the first purchase. Instead of immediately signing andexecuting the user-signed transaction, the payment platform stores theuser-signed transaction 204 and sends an amount “A” of fiat currency tothe merchant from the buffer fund 206.

Subsequently, the user makes a second purchase 208. Knowing that theprevious user-signed blockchain transaction 202 has not yet beenexecuted, the user transmits to the payment platform a replacementuser-signed blockchain transaction 210 specifying a transfer ofcryptocurrency from the user's account to the payment platform in anamount that would be sufficient to cover the both of the purchase pricesA+B. Upon receipt of the new blockchain transaction, the paymentplatform discards or archives the previously received transaction andreplaces it with the new one 212, and sends an amount “B” of fiatcurrency to the merchant (which may not be the same merchant as for theprevious purchase) from the buffer fund 214. Note that archiving ofearlier user-signed blockchain transactions can be useful in the eventthat a purchase is reversed, for example if the user decides to returnthe purchased item for a full refund.

Sometime later, the user makes a third purchase 216, and transmits tothe payment platform a replacement user-signed blockchain transaction218 specifying a transfer of cryptocurrency from the user's account tothe payment platform in an amount that would be sufficient to cover theall three of the purchase prices A+B+C. Upon receipt of the newblockchain transaction, the payment platform discards or archives thepreviously received user-signed transaction, replaces it with the newone 220, and sends an amount “C” of fiat currency to the merchant fromthe buffer fund 222.

At some point, it is determined that a blockchain conversion should beexecuted so as to cover the aggregated purchases by the user. Dependingon the embodiment, this may be due to the elapsing of a specified periodof time, which can be a fraction of a day, an entire day, a week, amonth, or even longer. Or it may be due to the buffer fund falling belowa specified minimum funding level. Or it may be a decision that is timedby the payment platform so as to take advantage of favorablefluctuations in the exchange rate of the cryptocurrency. At this point,the payment platform signs the most recent blockchain transaction 224,which has already been signed by the user, and uses the doubly-signedtransaction to initiate a single “lump sum” blockchain conversion 226,whereby sufficient cryptocurrency to cover all three of the purchases A,B, and C is transferred from the user's cryptocurrency account to thepayment platform, and then is sold 228 so that the buffer fund can bereplenished 230. This approach avoids the excess blockchain fees thatwould arise from multiple blockchain transactions instead of a singleaggregated blockchain transaction.

In some of these embodiments, each time the user makes a purchase 200,208, 216, a “locked-in” cryptocurrency exchange rate is assigned to thepurchase, whereby the user is insulated from any subsequent fluctuationsin the exchange rate, blockchain conversion fees, etc. According to thisapproach, the payment platform assumes any gain or loss resulting fromsuch fluctuations between the time the purchase is made and the timethat the subsequent blockchain conversion occurs.

In embodiments, transactions made by a plurality of users are aggregatedand converted to fiat currency in a single blockchain conversion,thereby further reducing blockchain conversion fees.

In various embodiments the payment platform is able to acceptcorrections and reversals of transactions without imposing significantfees if the corrections or reversals are made before the associatedblockchain conversion 224 is executed. In some of these embodiments areversal of a transaction does not require any additional authorizationor interaction by the user. Instead, the most recent user-signedtransaction can be discarded and a previously received user-signedtransaction can be retrieved from an archive and reinstated. In otherembodiments, reversal or correction of a transaction requiresauthorization by the user so that a user-signed blockchain transactionis provided to the payment platform specifying the corrected amount ofcryptocurrency to be withdrawn from the wallet and used for the nextblockchain conversion.

Embodiments further establish reserve funds of cryptocurrency, which canbe liquidated to offset a shortfall when the exchange rate for thecryptocurrency falls between the time of purchase and the eventual timewhen the blockchain conversion occurs. In similar embodiments, thepayment platform can choose to sell cryptocurrency from the reserve fundin an amount that provides sufficient fiat currency to satisfypoint-of-sale (POS) transaction requirements, after which user'sauthorized withdrawals from the wallet can be executed and used forblockchain conversion of funds at a later time, when the exchange ratehas recovered and the user's authorized transaction amount will yieldsufficient fiat currency to replenish the buffer fund. In some of theseembodiments, usage fees that are charged to the user are paid by theuser in cryptocurrency, which is used to fund or supplement the reservecryptocurrency fund.

In some embodiments, when a new cryptocurrency wallet is opened for auser, the payment platform issues an address to the user for the newwallet, but does not initially deploy a new smart contract. Instead, theactual deploying of the smart contract is delayed until after a firstpurchase has been made using the issued address, and after anysubsequent aggregation period has been completed. In this way, the feesand any other expenses that are required to deploy a new smart contractare not incurred until they are actually needed. And in the case that auser determines that a wallet will not be needed, without having everused the wallet, then the cost of deploying a new smart contract isavoided.

In various embodiments, if a user wishes to obtain a wallet for thepurpose of holding a first type of cryptocurrency, for which thecreation and/or maintenance of such a wallet requires an expenditure ofa second type of cryptocurrency for the payment of fees, the paymentplatform is able to create the wallet for the first type ofcryptocurrency without requiring that the user open and fund a walletdirected to the second type of cryptocurrency. For example, creation fora user of a wallet containing U.S. Dollar Coin (USDC) cryptocurrencywill typically require use of the Ethereum blockchain, for which thetransaction fees must be paid in Ether. However, embodiments of thepresent invention are able to use an Ethereum wallet maintained by thepayment platform to make Ether payments on behalf of the user. The feesfor creating the USDC wallets can then be assessed against the user inUSDC currency, or in any other denomination, including fiat currency.

The foregoing description of the embodiments of the invention has beenpresented for the purposes of illustration and description. Each andevery page of this submission, and all contents thereon, howevercharacterized, identified, or numbered, is considered a substantive partof this application for all purposes, irrespective of form or placementwithin the application. This specification is not intended to beexhaustive or to limit the invention to the precise form disclosed. Manymodifications and variations are possible in light of this disclosure.

Although the present application is shown in a limited number of forms,the scope of the invention is not limited to just these forms, but isamenable to various changes and modifications without departing from thespirit thereof. The disclosure presented herein does not explicitlydisclose all possible combinations of features that fall within thescope of the invention. The features disclosed herein for the variousembodiments can generally be interchanged and combined into anycombinations that are not self-contradictory without departing from thescope of the invention. In particular, the limitations presented independent claims below can be combined with their correspondingindependent claims in any number and in any order without departing fromthe scope of this disclosure, unless the dependent claims are logicallyincompatible with each other.

1. A method, operable by a payment platform, of using cryptocurrency tocomplete a fiat currency purchase from a merchant, the methodcomprising: A) receiving by the payment platform of cryptocurrencydeposited by a user into a cryptocurrency account from which withdrawalof the cryptocurrency requires submission of a blockchain transactionthat is signed by both the user and by the payment platform; B) issuingby the payment platform of a payment number to the user, said paymentnumber being compatible for input into fiat currency point of sale (POS)payment processing systems; C) upon initiation of the fiat currencypurchase from the merchant by the user, receiving by the paymentplatform of a payment request communicated from a POS apparatus of themerchant, said payment request including a fiat currency purchase price;D) if a cryptocurrency balance of the cryptocurrency account issufficient to fund the fiat currency purchase price at a currentcryptocurrency exchange rate, transmitting by the payment platform ofpayment information to the user, said payment information including anequivalent cryptocurrency purchase amount; receiving by the paymentplatform of a user-signed blockchain transaction signed by the user,said user-signed blockchain transaction authorizing transfer to thepayment platform from the user's cryptocurrency account ofcryptocurrency in an aggregate amount equal to a sum of the equivalentcryptocurrency purchase amount and any previous cryptocurrency purchaseamounts applicable to previous purchases made by the user since a mostrecent blockchain conversion was executed by the payment platform; E)transmitting by the payment platform of fiat currency in an amount equalto the fiat currency purchase price to the merchant; G) deducting by thepayment platform of the equivalent cryptocurrency purchase amount fromthe cryptocurrency balance of the cryptocurrency account; H) during apurchase aggregation period, repeating steps C) through G) each time afiat currency purchase is initiated by the user; and I) upon terminationof the purchase aggregation period, executing by the payment platform ofa most recent of the user-signed transactions received from the user,thereby initiating a blockchain conversion to transfer the equivalentcryptocurrency amount from the cryptocurrency account of the user to thepayment platform.
 2. The method of claim 1, wherein step B) includesreceiving by the payment platform of a request for the payment numbervia a mobile device that is possessed by the user, and transmission ofthe payment number by the payment platform to the mobile device.
 3. Themethod of claim 1, wherein the payment number is valid only fortransaction of a single purchase.
 4. The method of claim 1, wherein thepayment number is valid only for a designated time period after it isissued.
 5. The method of claim 1, wherein step B) includes issuing bythe payment platform to the user of a physical placebo card having thepayment number recorded as a static string thereupon.
 6. (canceled) 7.The method of claim 1, wherein step A) includes depositing by the userof a plurality of types of cryptocurrency into a corresponding pluralityof cryptocurrency accounts, and wherein the payment number issued to theuser by the payment platform in step B) is directed to a selected one ormore of the cryptocurrency accounts.
 8. The method of claim 7, whereinin step D), if the cryptocurrency balance of the cryptocurrency accountto which the payment number is directed is not sufficient to fund thefiat currency purchase price, the payment information transmitted by thepayment platform to the user includes proposed amounts of cryptocurrencyto be withdrawn from a plurality of the cryptocurrency accounts to fundthe fiat currency purchase price.
 9. The method of claim 1, wherein themethod further includes, after step G) and before a first execution ofstep H), deploying a new smart contract associated with thecryptocurrency account. 10-25. (canceled)
 26. The method of claim 1,wherein in step F), the fiat currency transmitted by the paymentplatform to the merchant is withdrawn from a fiat currency bufferaccount.
 27. The method of claim 1, further comprising collecting feesfrom the user, said fees being denominated in cryptocurrency anddeposited in the reserve account.
 28. A method, operable by a paymentplatform, of using cryptocurrency to complete a fiat currency purchasefrom a merchant, the method comprising: A) receiving by the paymentplatform of cryptocurrency deposited by a user into a cryptocurrencyaccount from which withdrawal of the cryptocurrency requires submissionof a blockchain transaction that is signed by both the user and by thepayment platform; B) issuing by the payment platform of a payment numberto the user, said payment number being compatible for input into fiatcurrency point of sale (POS) payment processing systems; C) uponinitiation of the fiat currency purchase from the merchant by the user,receiving by the payment platform of a payment request communicated froma POS apparatus of the merchant, said payment request including a fiatcurrency purchase price; D) if a cryptocurrency balance of thecryptocurrency account is sufficient to fund the fiat currency purchaseprice at a current cryptocurrency exchange rate, transmitting by thepayment platform of payment information to the user, said paymentinformation including an equivalent cryptocurrency purchase amount; E)receiving by the payment platform of a user-signed blockchaintransaction signed by the user, said user-signed blockchain transactionauthorizing transfer to the payment platform from the user'scryptocurrency account of cryptocurrency in an aggregate amount equal toa sum of the equivalent cryptocurrency purchase amount and any previouscryptocurrency purchase amounts applicable to previous purchases made bythe user since a most recent blockchain conversion was executed by thepayment platform; F) transmitting by the payment platform of fiatcurrency in an amount equal to the fiat currency purchase price to themerchant; G) deducting by the payment platform of the equivalentcryptocurrency purchase amount from the cryptocurrency balance of thecryptocurrency account; H) during a purchase aggregation period,repeating steps C) through G) each time a fiat currency purchase isinitiated by the user; I) terminating the purchase aggregation period bythe payment platform when a balance of the fiat currency buffer accountfalls below a specified minimum or based on fluctuations in thecryptocurrency exchange rate; J) upon terminating the purchaseaggregation period, executing by the payment platform of a most recentof the user-signed transactions received from the user, therebyinitiating a blockchain conversion to transfer the equivalentcryptocurrency amount from the cryptocurrency account of the user to thepayment platform; and K) maintaining by the payment platform of acryptocurrency reserve fund, and if executing the most recentuser-signed transaction does not yield sufficient fiat currency toreplenish a total of the fiat currency payments made to merchants sincethe most recent blockchain transaction, including cryptocurrency fromthe reserve fund in the blockchain transaction.
 29. The method of claim28, wherein step B) includes receiving by the payment platform of arequest for the payment number via a mobile device that is possessed bythe user, and transmission of the payment number by the payment platformto the mobile device.
 30. The method of claim 28, wherein the paymentnumber is valid only for transaction of a single purchase.
 31. Themethod of claim 28, wherein the payment number is valid only for adesignated time period after it is issued.
 32. The method of claim 28,wherein step B) includes issuing by the payment platform to the user ofa physical placebo card having the payment number recorded as a staticstring thereupon.
 33. The method of claim 28, wherein step A) includesdepositing by the user of a plurality of types of cryptocurrency into acorresponding plurality of cryptocurrency accounts, and wherein thepayment number issued to the user by the payment platform in step B) isdirected to a selected one or more of the cryptocurrency accounts. 34.The method of claim 33, wherein in step D), if the cryptocurrencybalance of the cryptocurrency account to which the payment number isdirected is not sufficient to fund the fiat currency purchase price, thepayment information transmitted by the payment platform to the userincludes proposed amounts of cryptocurrency to be withdrawn from aplurality of the cryptocurrency accounts to fund the fiat currencypurchase price.
 35. The method of claim 28, wherein the method furtherincludes, after step G) and before a first execution of step H),deploying a new smart contract associated with the cryptocurrencyaccount.
 36. The method of claim 28, wherein in step F), the fiatcurrency transmitted by the payment platform to the merchant iswithdrawn from a fiat currency buffer account.
 37. The method of claim28, further comprising collecting fees from the user, said fees beingdenominated in cryptocurrency and deposited in the reserve account.